Change around the Corner?

An Insider’s View on Developing the Landscape of Financing Global Healthcare Systems

By Holger Micheel-Sprenger, CEO, ICME International AG, Germany

By Holger Micheel-Sprenger, CEO, ICME International AG, Germany

Technological advances, demographic change, and increasing numbers of patients suffering from lifestyle-related diseases are forcing healthcare systems re­-evaluate their business models, with a focus on increasing quality while lowering cost. To achieve this, healthcare delivery systems, both public and private, are having to re-think how they will deliver care and how they will be reimbursed for that care. History has proven that profitability and quality are not mutually exclusive.

Mainly due to demographic change and technological advances, global life expectancy is steadily increasing. However, paired with increasing patient numbers suffering from lifestyle-related diseases, more life years are spent in sickness than in health. In order to cater to this shift in demand towards treating chronic diseases such as high blood pressure and diabetes, and growing numbers of elderly patients, healthcare systems and their providers are in a rush to adapt to the changing patient cohorts and to start focusing on delivering high quality care, rather than focusing on the volume of patients treated.

High standards of care are especially important, considering that the rising cost for medical treatment is becoming a burden for healthcare systems worldwide, as can be seen by the growing GDP percentage spent on healthcare since 2000. With an average spending of around 6%-10% of the GDP in the OECD countries, quality of care is at the heart of the discussion around budgeting and improving the health of the population in a functioning economy. Looking at recent governmental policies, privatisation initiatives, and healthcare strategies within individual countries there is a clear trend towards governments developing strategies and policies focused on cost efficiency and better outcomes.

Not only is “health” itself a driving factor when it comes to running successful global economies, but its prevalence in society is an important factor when it comes to planning healthcare expenditures and justifying treatment budgets. The global rise in chronic diseases is changing the requirements and demand for healthcare services from acute to prevention and chronic disease treatments.

The rise of diabetes in leading economies such as the United States of America, countries inside the European Union, as well as the Middle East, are proof that a change in healthcare protocols will have to come sooner than later. Besides diabetic-related conditions, cardiovascular diseases will have a significant impact on future health delivery requirements by forcing healthcare services to expand their spending on invasive and non-invasive treatment options, such as Cardiac Catheter-Labs and pharmaceutical interventions. Additionally, the increasing prevalence and mortality of cancer requires innovative diagnostic methods and treatment therapies, which the research area of personalised medicine is exploring.

All of the above treatments are necessary and needed in an era where medical and technological advances are crucial for certain patient groups. However, all these come at a cost, which differs depending on where treatment is provided. Not only do treatment costs vary across nations, but even within cities, prices for the same treatment vary, depending on the provider, insurance plan and the overall reimbursement strategy of the government. Social Healthcare Systems, such as the ones in Canada and the United Kingdom, have taken measures to balance out these irregularities to the benefit of their patients with the goal of making healthcare more affordable and providing the same treatment at the same price.

Benchmark treatment prices would make healthcare budgeting easier, since costs are foreseeable based on treatment history and disease prevalence in each area of the country. Healthcare providers base their financial success on the volume of patients treated in the facility rather than striving for highest quality, although quality of treatment, especially in medicine, is key to a successful facility with a solid reputation.

With quality of treatment being a factor mostly measured by the re-visiting rate of patients, healthcare systems are able to gain control over patient satisfaction by monitoring this closely. Decreasing re-visiting rates speak for the provider and its reputation as a high-quality facility. Paring these quality measurements with benchmark prices for treatment of patients with similar diagnosis, competition in the market would increase dramatically, since healthcare providers would only be able to compete over patient volume by increasing quality of care and positive treatment outcomes.

By increasing competition through quality, the nature of economics will automatically lead to decreasing treatment prices in order to attract higher volumes of patients. Attractive, competitive markets are successful because multiple players are in the market, which the government is able to also gain control over. By decreasing authority of healthcare monopolies and lowering the baseline requirements to enter the market, the volume of providers is assumed to steadily increase until market saturation is reached. At this point, prices as well as customer numbers are assumed to be steady, which makes the financial aspect of running a healthcare facility and system much more transparent and therefore easier to manage.

Loosening restrictions on one end might have to mean tighter restrictions on the other in order to guarantee a free, competitive market. Restrictions on mergers of major players should be given special attention in regards to creating monopolies that not only harm the market but also the patient. With monopolies setting new prices in underserved areas, patients would no longer profit from the competitive market. Even this scenario has a solution by introducing competitors from other cities, states or countries to the market through medical tourism. If outside competitors would offer patients in underserved areas cheaper treatments outside their home area, monopolies would not only be forced to lower their prices but most importantly, patients would receive high quality care at a reasonable price.

Especially for medical tourism, high rates of patient satisfaction paired with excellent quality of treatment are key for a successful business. Healthcare institutions have yet to understand that treating patients based on quality rather than volume is a trend that provides a sustainable and profitable long-term solution. Increasing patient satisfaction can be achieved by using multiple pathways such as creating treatment plans with fixed appointments and a set medical team, which help to guide the patient through the whole treatment process. One medical team compared to different physicians not only increases trust between the patient and the facility but more importantly, the patient is treated in a holistic, multidisciplinary manner within the same constellation of medical staff such as physicians, nurses, and physical therapists.

Another example for increasing patient satisfaction is simply time spent with the patient. Studies have shown that when nurses or other voluntary staff spent one-on-one time with the patient at least three times a day for an average of 10 minutes, acute and chronic wounds, as well as fractures are more likely to heal faster compared to standard care. By reimbursing healthcare facilities through a value-based approach that puts the patient first, healthcare systems would be able to reach a point, in which quality of treatment in single facilities would be recognised not only inside the country but also from the outside.

Profitability and quality therefore do go hand in hand when done right. High profit margins are definitely feasible in value-based healthcare and reimbursement systems. Healthcare facilities can increase their margins by specialising in medical fields, attracting patients and highly sought-after staff through quality of treatment and research. The volume of patients depends on the standard of care delivered, a comprehensive continuum of care after the intervention, as well as transparent cost and revenues for patient and provider. The train to a revolutionised healthcare system is on its way and countries will have to choose in the next years whether to jump on it or be left behind.